Blue Shield, Kaiser among state insurers fined

Health care

Published 4:00 am, Tuesday, November 30, 2010

State regulators Monday fined seven of California's largest health insurers nearly $5 million for systematically failing to pay doctors and hospitals fairly and on time.

The California Department of Managed Health Care issued the fines following an 18-month audit in which investigators looked at a small but statistically significant sample of claims. The investigation found the plans were paying on average about 80 percent of the claims correctly, far below the legal threshold of 95 percent.

"Our clear and consistent message is that California's hospitals and physicians must be paid fairly and on time," said Cindy Ehnes, director of the Department of Managed Health Care, which is charged with regulating the states' health maintenance organizations, or HMOs.

In addition to the fines, the companies must pay the doctors and hospitals restitution that is expected to run into the "tens of millions of dollars," Ehnes said. The plans will also be required to come up with a plan to correct the problem and submit to future audits.

The fines for Cigna and Aetna were $450,000 and $300,000, respectively, for a total of $4.85 million.

The fines were negotiated and agreed on in advance by the insurers so Ehnes didn't anticipate any appeals.

Blue Shield officials said the company is improving its claims-processing procedures. "The recent fines issued by the DMHC represent relatively minor administrative errors made on a small selection of transactions out of the millions that Blue Shield of California processes each year," the San Francisco insurer said in a statement.

Kaiser officials said the HMO is committed to achieving or exceeding all regulatory requirements. "Kaiser Permanente has made improvements in processing claims in a timely and accurate manner, and we continue to build on our progress to meet the high standards of the Department of Managed Health Care and other regulators," its statement read.

The other insurers did not respond to requests for comment.

Patrick Johnston, the head of the state insurance trade group, said in general, health insurers are paying claims in a timely manner, but will work with the state to improve their performance.

"Plans are committed to ensuring our members have access to the health care they need every day," said Johnston, chief executive officer of the California Association of Health Plans, in a statement.

"We have long recognized that the administrative side of health care coverage can take valuable time away from patient care, which is why plans have been working to streamline processes both at the health plan level and in doctors' offices."

Five of the insurers, excluding Anthem and Blue Shield, were also found to have improper provider appeals processes.

When doctors and hospital officials try to dispute a claim, they often have to deal with the same individual who originally denied the claim in the appeals process, Ehnes said. Plans are in place to correct this problem, she said.

Cracking down on the health plans for not properly paying providers helps consumers, said Anthony Wright, executive director of Health Access California.

"Consumers would rather that the time and resources of health providers go to patient care, rather than in fighting to get insurers to pay correctly," he said.

Health insurers fined

The California Department of Managed Health Care on Monday issued the following fines against health plans for failing to pay doctors and hospitals accurately and on time: